From the looks of my pre-launch
demonstration, the new
MySpace Music appears to be a formidable new entrant in the digital music sphere, affecting rivals large and small. The ambitious joint venture may not remake the entire industry, as the four major labels involved surely hope it will, but MySpace Music is positioned to compete on numerous fronts. Here's a breakdown of some areas affected:
∙
Subscription services. MySpace Music will offer free access to streaming music from a massive library of songs, similar to that that offered by RealNetworks Inc.'s [
RNWK] market-leading
Rhapsody service. Customers currently pay $12.99 per month to rent music via Rhapsody's streaming service, or $14.99 for a "to-go" plan that allows them to load songs onto an MP3 player. The former is largely obviated by MySpace Music's free alternative; the latter retains some value since MySpace Music does not provide free downloads for portable devices. Rhapsody rival Napster Inc., which offered similar pricing plans, was
acquired by Best Buy Co. Inc. last week.
∙
Free on-demand streaming services. A variety of services including
Imeem Inc.,
iLike Inc., and CBS-owned
Last.fm Ltd., allow users to search for free songs and listen to them in players or widgets, on social networks, and inside or outside the Web browser.
MySpace Music offers a huge catalog and will compete with all of them, but each retains at least one key trait that differentiates them: Imeem's deeper indie content, Last.fm's stronger recommendation engine and "scrobbling" function, iLike's massive Facebook user base. MySpace surely will capture many new users unfamiliar with such services, but the early adopters who've been using them all along (read: most tech-savvy music fans) may not migrate to MySpace.
∙
Playlisting sites. Lots of people enjoyed the now-suspended
Muxtape Inc. and its
spawn, especially as tools to discover independent-label content. As long as significant amounts of indie music aren't available on MySpace Music, those sites will still be relevant despite MySpace's unlimited playlisting function. And MySpace is missing a lot: Indie negotiator Merlin says the labels it represents, which carry 9% of U.S. market share, won't be available on the new service at launch. Muxtapes and their ilk also allow people to upload their own content, making them a valuable discovery service.
∙
Paid download sales. MySpace Music takes aim at Apple Inc.'s [
AAPL] iTunes store, the number-one retailer of music in the U.S., although it doesn't operate its own standalone store. Amazon.com Inc. [
AMZN], which opened its DRM-free MP3 store less than a year ago, will handle the back-end retail operations for MySpace Music, which may result in a high affiliate fee that cuts into already-meager profits. Although the MySpace Music/Amazon retail channel lacks iTunes' convenient synchronization with iPods, its song files can be played on Apple hardware or any other digital music player.
To my eyes, the service is a very good one for mainstream users, although it still lacks a number of key features. The closely integrated artist pages, user profiles and playlists offer news feeds about friends' tastes, but MySpace Music doesn't have a true recommendation engine, at least not on the order of Last.fm's. It doesn't provide a widget-based distribution system, keeping users on the MySpace site (the better to serve them with more advertising). Moreover, the conspicuous lack of key indie-label material could provoke a backlash: Merlin's CEO, Charles Caldas, has already called it "incredibly disappointing" that the site was launched without more indie content.
What's more, its strategic direction will depend on who takes the reins as CEO of the joint venture. The recruiting
hasn't gone well, and MySpace temporarily
gave up on finding a new leader a few weeks ago in order to focus on launching. More names have
surfaced as candidates, including Owen Van Natta, late of Amazon and Facebook, and Andy Schuon, the former leader of failed music joint venture PressPlay, but no one's committed to the gig yet.
MySpace Music will be highly influential in the mainstream music market, and it's hard to imagine it being a total bust. MySpace still has many millions of daily active users, however many have moved on to Facebook or elsewhere, but has yet to prove itself as a comprehensive music destination. Whether it can sell enough ads at a high enough CPM to prove itself worthwhile for the labels is another matter, and it's unknown whether people will think of MySpace as a retailer going forward. Tonight, MySpace and the labels are taking their very best shot.
-- Paul BonanosSee earlier post from Tech Confidential concerning MySpace Music's launch
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